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Tuesday
Oct 24 2000
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0049 hrs IST
1419 EST
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New Pak policy to attract oil majors for exploration
KARACHI
PAKISTAN’S new offshore policy will carry wider incentives to attract investment from oil majors, including creating ultra-deep exploration areas, industry officials said on Monday. But they said winning investment would largely depend on a major discovery being made in at least one offshore oil location, rather than any incentives contained in the new policy.
Industry sources said the new policy, approved last week by military ruler General Pervez Musharraf, is set to provide a four-year holiday on royalty payments for producers who find oil offshore. Royalty would rise to five per cent in the fifth year, 11 per cent in the sixth year and 12.5 per cent in the seventh and successive years, industry sources said.
Corporate tax would be 40 per cent when offshore discoveries turn profitable, compared with a 50 per cent corporate tax for other discoveries, the sources said. Incentives are greater for ultradeep water exploration. No details about the new policy have been published.
“The entire effort is to bring major oil companies such as BP Amoco, Exxon Mobil and the likes, who are not active in Pakistan, but they would only stand in the queue if there is one elephant discovery,” said an executive at a foreign oil producer.
He said a large discovery would minimise the country risk attached to Pakistan, since producers would have an option to export oil produced in deep water.At present three large operators, France’s Total Elf Fina, Royal/Dutch Shell and British Gas are conducting seismic surveys in deep offshore locations.
To date, more gas than crude has been discovered in Pakistan, but the country hopes the new offshore policy will help that change. Pakistan produces 57,000 barrels per day (bpd) of oil, which only meets 15 per cent of its domestic need of 3,85,00 bpd.
Musharraf’s government has marked the oil and gas sector as a key for economic growth. — Reuters
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